The five-page administrative proceeding revealed that NextBlock has been offering securities that were not registered with the SEC. It also made false representations that four prominent individuals were serving as Nextblock’s advisors.

“These misrepresentations were part of the selling point of NextBlocks’s fundraising effort: that NextBlock and Tapscott had access to, and unparalleled relationships with … the highest profile figures in the blockchain community,” the notice disclosed.

These misleading representations brought in a convertible debenture offering of around $16 million ($20 million CAD) from more than 100 investors across Canada, the United States, and elsewhere. Of the total investment, $2.4 million was raised by investors from the United States, hence the role of SEC.

SEC took into consideration the fact that the Ontario Securities Commission, the regulatory body presiding over the office location of NextBlock, imposed a civil penalty of $520,000 for the same offense.

The Commission ordered the Blockchain Revolution author to pay a penalty of $25,000, but it did not impose a further civil penalty. A cease-and-desist order has also been issued for further securities violations.

“You really see someone’s character, not when things go well, but when they go bad,” Michael Decter, CEO of Toronto-based investment firm LDIC Inc., told IT World Canada. “Alex Tapscott had a painful lesson early in his career and I would be happy to invest with him again.”

The same comments were echoed by other debenture holders.

“He made a mistake or had a miscommunication with some of the early backers or friends and that was unfortunate,” one of the private investors said. “Once that happens, he acted with great integrity, shutting it down immediately, liquidating assets so he could repay people as quickly as possible.”